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On-Reserve Housing and Infrastructure: Recommendations for Change

Photo Construction of new school in Membertou First Nation, Nova Scotia
Photo Construction of new school in Membertou First Nation, Nova Scotia

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The Report

Executive Summary

Infrastructure is not just about bricks and mortar. Ageing, inadequate and poor infrastructure can have significant negative effects on the social and economic outcomes of communities. In this respect, infrastructure is about meeting the most basic needs of individuals, families and communities – putting a roof over a family’s head and making sure that they have clean drinking water. The Standing Senate Committee on Aboriginal Peoples (the committee) began hearing from witnesses about housing and infrastructure needs on reserve in November 2013. The study included visits to communities from coast to coast to see first-hand the challenges and best practices relating to housing and infrastructure.

1. Housing

In February 2015, the committee tabled an interim report on housing which highlights severe housing shortages and overcrowding; poorly constructed housing that is in serious disrepair; and barriers which First Nation members and communities confront as they try to find innovative solutions to meeting their housing needs. The committee heard that the funding that First Nations communities receive from Aboriginal Affairs and Northern Development Canada (AANDC) is insufficient to properly maintain a community’s housing stock. Some First Nations have supplemented this funding by charging rent for housing, but many others do not have the human resource capacity to initiate or manage a rental regime, are unwilling to implement a rental regime, or are in communities where this is not financially feasible.

The committee identified the need to examine current initiatives to addressing housing on reserve. For example, although the $300 million set aside by the federal government in a trust fund for the First Nations Market Housing Fund in 2008 was expected to result in 25,000 new homes in 10 years, the most recent data provided to the committee was that 99 homes had been built by May 2015.

This report makes recommendations to address some of these housing challenges, including:

  • Removing the 2% cap on annual increases in departmental funding so that funding for housing and infrastructure can keep up with population growth and inflationary pressures;
  • Putting in place the necessary measures to ensure that First Nations have the human resource capacity to manage their housing stock and to adopt and enforce building codes; and
  • Re-evaluating, strengthening and expanding existing programs such as the Ministerial Loan Guarantee and the First Nations Market Housing Fund to make sure that these programs actually result in more homes for First Nations people.

2. Infrastructure

Since the autumn of 2014, the focus of the committee has been on community infrastructure – roads, water systems, schools, bridges, and community facilities. Infrastructure deficits are not unique to First Nations communities, but the magnitude of this deficit on reserve is particularly striking. Visiting First Nations communities, the committee saw first-hand over-flowing sewage lagoons and communities with boil-water advisories which had been in place for over a decade.

Unlike other levels of government, which finance infrastructure by borrowing in the bond market and by raising tax revenues, First Nations governments face unique barriers in their access to capital for infrastructure. Those who do not have own-source revenues are forced to apply for funding through AANDC for infrastructure projects, and to wait until funding becomes available. First Nations who have own-source revenue sometimes build their own infrastructure, like schools or community buildings, by resorting to conventional loans with banks on far less favourable terms compared to their municipal or provincial counterparts.

In this report, the committee emphasizes the important role that economic development can play in helping First Nations communities meet their infrastructure needs. Lack of funding for basic infrastructure – such as roads, and water and wastewater services – is currently limiting the ability of First Nations to build much-needed housing. Similarly, the lack of infrastructure makes it difficult to take advantage of economic development opportunities. The committee recommends that additional support be provided to First Nations so that they can prepare comprehensive community plans which will allow them to benefit from economic development and plan for the housing needs of their communities.

The committee recognizes that federal government funding alone will not allow First Nations to meet these infrastructure needs. The federal government currently provides funding for infrastructure on a cash-based, current-year funding basis. It is impossible to catch up on the infrastructure deficit in First Nations communities in this way. The committee has heard from a broad spectrum of witnesses, including First Nations communities and financial institutions, that the federal government could make more progress on addressing infrastructure if it could help First Nations leverage financing. The committee is recommending that AANDC work with First Nations organizations to create a Ministerial Loan Guarantee program for First Nations infrastructure and housing on reserve, which would make it possible to securitize a substantially larger amount of financing dollars than annual AANDC funding allocations, thereby spreading the cost over the life of the asset.

First Nations communities are diverse; the tools to address their requirements must reflect this diversity. The committee’s recommendations reflect this diversity, ranging from removing the 2% cap on annual increases in funding at AANDC, building First Nations capacity to manage housing, facilitating the ability of First Nations to prepare comprehensive community plans which facilitate economic development, and introducing mechanisms to allow First Nations to leverage financing. The committee hopes that the recommendations in this report provide options that can support First Nations communities in their ongoing efforts to meet their housing and infrastructure needs.

Photo of We Wai Kai Nation house, B.C.

Recommendations

Recommendation 1

That Aboriginal Affairs and Northern Development Canada remove the 2% cap on annual increases on funding, effective Budget 2016-2017.

Recommendation 2

That the Canada Mortgage and Housing Corporation allocate sufficient funds to the On-Reserve Non-Profit Housing Program, also known as the Section 95 program, in order to address the growing shortage of housing on reserve; and

That the CMHC explore options to ensure greater flexibility in the way that funding is allocated for the On-Reserve Non-Profit Housing Program, in particular, to allow for multi-year commitments which would give communities adequate time to organize construction.

Recommendation 3

That the Annual Band Support Program at Aboriginal Affairs and Northern Development Canada provide funding for the hiring of a qualified housing manager on reserve, if necessary.

Recommendation 4

That Aboriginal Affairs and Northern Development Canada

  • Consult with First Nations organizations to identify concerns related to the jurisdictional authority for implementing and enforcing building codes and to assess the capacity issues which would be required to adopt and then enforce building codes;
  • Put in place the necessary measures to address the capacity of First Nations (and organizations which provide support to First Nations) to comply with legislated standards as a precondition of a new legislative framework for the application of building codes on reserve; and
  • Develop such legislation, in consultation with affected First Nations.

Recommendation 5

That Aboriginal Affairs and Northern Development Canada review the shelter allowance component of the Income Assistance Program to: Assess whether the level of shelter allowance is adequate to cover the housing costs of recipients, including rent and heating, and to ensure that it is applied in a consistent manner across regions and reflects the provincial comparability principle; and

That the results of this review be tabled in Parliament no later than June 30, 2016.

Recommendation 6

That Aboriginal Affairs and Northern Development Canada and the Canada Mortgage and Housing Corporation collaborate in the development of a housing strategy for remote and isolated First Nations communities; that this strategy address the specific challenges and costs of building in remote communities; and that AANDC review the adequacy of the remote and isolation index to ensure that it reflects actual costs.

Recommendation 7

That Aboriginal Affairs and Northern Development Canada, in consultation with First Nations, take immediate steps to improve the efficiency of the Ministerial Loan Guarantee (MLG) approval process and the operational guidelines of the MLG program to ensure that they provide First Nations with the required flexibility to manage risks associated with mortgages backed by MLGs. Also, that the government expand the MLG program to grant First Nations governments access to the program, rather than just individual First Nations members; and the government increase the guarantee authority limit to $3.2 billion with consideration for future increases.

Recommendation 8

That the Canada Mortgage and Housing Corporation commission a value for money evaluation of the First Nations Market Housing Fund, and develop a series of proposals for expanding the possible uses of the Fund, including the possibility of securitizing the Fund to finance innovative housing projects; and

That the proportion of the First Nations Market Housing Fund allocated to the Capacity Development Program component be increased and eligibility for this program component be extended to First Nations who are at the first stages of applying for the FNMHF.

Recommendation 9

That Aboriginal Affairs and Northern Development Canada take the necessary steps to extend the application of the First Nations Land Management Act (FNLMA) with a focus on:

  • Ensuring that First Nations currently operating under the Indian Act land management regime are provided with the training necessary to transition to the FNLMA in a timely manner;
  • Ensuring that the current signatory First Nations to the FNLMA regime are provided with the support necessary to become fully operational and to meet the increased requirements of the regime, including developing their land codes; and,
  • Addressing, on an urgent basis, the backlog of applicants currently awaiting entry to the FNLMA regime, and exploring, in collaboration with the First Nations Lands Advisory Board, financing options to allow for greater First Nations participation in the regime.

Recommendation 10

That Aboriginal Affairs and Northern Development Canada explore the possibility of opt-in legislation, in consultation with First Nations, which would make Section 89 of the Indian Act inapplicable. Such opt-in legislation could facilitate private property ownership for First Nations members living on reserve.

Recommendation 11

Aboriginal Affairs and Northern Development Canada explore, in consultation with First Nations, the creation of a ministerial loan guarantee program for First Nations infrastructure on reserve.

Recommendation 12

That Aboriginal Affairs and Northern Development Canada take immediate steps to convene a national roundtable with the National Aboriginal Economic Development Board and other First Nations organizations to explore ways to facilitate First Nations access to Indian moneys, whether through amendments to the First Nations Oil and Gas and Moneys Management Act or through other appropriate legislative or policy measures.

Recommendation 13

That Aboriginal Affairs and Northern Development Canada ensure that adequate funding be provided to First Nations for the development of comprehensive community plans; that such plans reflect both community infrastructure and economic development needs; and that they cover a period of longer than 5 years.

Contact information

General Information:
613-990-0088 or 1-800-267-7362

Email: appa@sen.parl.gc.ca

Mailing Address:
Standing Senate Committee on Aboriginal Peoples
The Senate of Canada
Ottawa, Ontario
Canada, K1A 0A4